Chapter 14 PROGRAM INTEGRITY

Transcription

1 INTRODUCTION Chapter 14 PROGRAM INTEGRITY The HABC is committed to ensuring that subsidy funds made available to the HABC are spent in accordance with HUD requirements. This chapter covers HUD and HABC policies designed to prevent, detect, investigate, and resolve instances of program abuse or fraud. It also describes the actions that will be taken in the case of unintentional errors and omissions. Part I: Preventing, Detecting, and Investigating Errors and Program Abuse. This part presents HABC policies related to preventing, detecting, and investigating errors and program abuse. Part II: Corrective Measures and Penalties. This part describes the corrective measures the HABC must and may take when errors or program abuses are found. Page 14-1

2 PART I: PREVENTING, DETECTING, AND INVESTIGATING ERRORS AND PROGRAM ABUSE 14-I.A. PREVENTING ERRORS AND PROGRAM ABUSE HUD created the Enterprise Income Verification (EIV) system to provide housing authorities with a powerful tool for preventing errors and program abuse. For purposes of this chapter the term error refers to an unintentional error or omission. Program abuse or fraud refers to a single act or pattern of actions that constitute a false statement, omission, or concealment of a substantial fact, made with the intent to deceive or mislead. HABC is required to use the EIV system in its entirety in accordance with HUD administrative guidance [24 CFR 5.233]. HABC is further required to: Provide applicants and participants with form HUD-52675, Debts Owed to HABCs and Terminations Require all adult members of an applicant or participant family to acknowledge receipt of form HUD by signing a copy of the form for retention in the family file The HABC anticipates that the vast majority of families, owners, and HABC employees intend to and will comply with program requirements and make reasonable efforts to avoid errors. To ensure that the HABC s HCV program is administered effectively and according to the highest ethical and legal standards, the HABC will employ a variety of techniques to ensure that both errors and intentional program abuse are rare. The HABC will discuss program compliance and integrity issues during the voucher briefing sessions described in Chapter 5. The HABC will provide each applicant and participant with a copy of Is Fraud Worth It? (form HUD-1141-OIG), which explains the types of actions a family must avoid and the penalties for program abuse. The HABC will provide each applicant and participant with a copy of What You Should Know about EIV, a guide to the Enterprise Income Verification (EIV) system published by HUD as an attachment to Notice PIH In addition, the HABC will require the head of each household to acknowledge receipt of the guide by signing a copy for retention in the family file. The HABC will place a warning statement about the penalties for fraud (as described in 18 U.S.C and 1010) on key HABC forms and form letters that request information from a family or owner. HABC staff will be required to review and explain the contents of all HUD- and HABCrequired forms prior to requesting family member signatures. Page 14-2

3 14-I.B. DETECTING ERRORS AND PROGRAM ABUSE In addition to taking steps to prevent errors and program abuse, the HABC will use a variety of activities to detect errors and program abuse. Quality Control and Analysis of Data Under the Section 8 Management Assessment Program (SEMAP), HUD requires the HABC to review a random sample of tenant records annually to determine if the records conform to program requirements and to conduct quality control inspections of a sample of units to ensure HQS compliance [24 CFR, Part 985]. (See Chapter 16 for additional information about SEMAP requirements). In addition to the SEMAP quality control requirements, the HABC will employ a variety of methods to detect errors and program abuse. The HABC routinely will use available sources of up-front income verification, including HUD s EIV system, to compare with family-provided information. At each annual reexamination, current information provided by the family will be compared to information provided at the last annual reexamination to identify inconsistencies and incomplete information. The HABC will compare family-reported income and expenditures to detect possible unreported income. Independent Audits and HUD Monitoring OMB Circular A-133 requires all HABCs that expend $500,000 or more in federal awards annually to have an independent audit (IPA). In addition, HUD conducts periodic on-site and automated monitoring of HABC activities and notifies the HABC of errors and potential cases of program abuse. The HABC will use the results reported in any independent audit or HUD monitoring reports to identify potential program abuses as well as to assess the effectiveness of the HABC s error detection and abuse prevention efforts. Individual Reporting of Possible Errors and Program Abuse The HABC encourages staff, program participants, and the public to report possible program abuse. Page 14-3

4 14-I.C. INVESTIGATING ERRORS AND PROGRAM ABUSE When the HABC Will Investigate The HABC will review all referrals, specific allegations, complaints, and tips from any source including other agencies, companies, and individuals, to determine if they warrant investigation. In order for the HABC to investigate, the allegation must contain at least one independently-verifiable item of information, such as the name of an employer or the name of an unauthorized household member. The HABC will investigate inconsistent information related to the family that is identified through file reviews and the verification process. Consent to Release of Information [24 CFR ] The HABC may investigate possible instances of error or abuse using all available HABC and public records. If necessary, the HABC will require HCV families to give consent to the release of additional information. Analysis and Findings The HABC will base its evaluation on a preponderance of the evidence collected during its investigation. Preponderance of the evidence is defined as evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence that as a whole shows that the fact sought to be proved is more probable than not. Preponderance of evidence may not be determined by the number of witnesses, but by the greater weight of all evidence For each investigation the HABC will determine (1) whether an error or program abuse has occurred, (2) whether any amount of money is owed the HABC, and (3) what corrective measures or penalties will be assessed. Consideration of Remedies All errors and instances of program abuse must be corrected prospectively. Whether the HABC will enforce other corrective actions and penalties depends upon the nature of the error or program abuse. In the case of family-caused errors or program abuse, the HABC will take into consideration (1) the seriousness of the offense and the extent of participation or culpability of individual family members, (2) any special circumstances surrounding the case, (3) any mitigating circumstances related to the disability of a family member, (4) the effects of a particular remedy on family members who were not involved in the offense. In the case of owner-caused errors or program abuse, the HABC will take into consideration (1) the seriousness of the offense, (2) the length of time since the violation has occurred, and (3) the effects of a particular remedy on family members who were not involved in the offense. Page 14-4

5 Notice and Appeals The HABC will inform the relevant party in writing of its findings and remedies within 10 business days of the conclusion of the investigation. The notice will include (1) a description of the error or program abuse, (2) the basis on which the HABC determined the error or program abuses, (3) the remedies to be employed, and (4) the family s right to appeal the results through the informal review or hearing process, if applicable (see Chapter 16). Page 14-5

6 PART II: CORRECTIVE MEASURES AND PENALTIES 14-II.A. SUBSIDY UNDER- OR OVERPAYMENTS A subsidy under- or overpayment includes (1) an incorrect housing assistance payment to the owner, (2) an incorrect family share established for the family, and (3) an incorrect utility reimbursement to a family. Corrections Whether the incorrect subsidy determination is an overpayment or underpayment of subsidy, the HABC must promptly correct the HAP, family share, and any utility reimbursement prospectively. Increases in the family share will be implemented only after the family has received 30 days notice. Any decreases in family share will become effective the first of the month following the discovery of the error. Reimbursement Whether the family or owner is required to reimburse the HABC or the HABC is required to make retroactive subsidy payments to the owner or family depends upon which party is responsible for the incorrect subsidy payment and whether the action taken was an error or program abuse. Policies regarding reimbursement are discussed in the three sections that follow. 14-II.B. FAMILY-CAUSED ERRORS AND PROGRAM ABUSE Family obligations and general administrative requirements for participating in the program are discussed throughout this plan. This section deals specifically with errors and program abuse by family members. An incorrect subsidy determination caused by a family generally would be the result of incorrect reporting of family composition, income, assets, or expenses, but also would include instances in which the family knowingly allows the HABC to use incorrect information provided by a third party. Family Reimbursement to HABC [HCV GB pp to 22-13] In the case of family-caused errors or program abuse, the family will be required to repay any excess subsidy received. The HABC may, but is not required to, offer the family a repayment agreement in accordance with Chapter 16. If the family fails to repay the excess subsidy, the HABC will terminate the family s assistance in accordance with the policies in Chapter 12. HABC Reimbursement to Family [HCV GB p ] The HABC will not reimburse the family for any underpayment of assistance when the underpayment clearly is caused by the family. Page 14-6

7 Prohibited Actions An applicant or participant in the HCV program must not knowingly: Make a false statement to the HABC [Title 18 U.S.C. Section 1001]. Commit fraud, bribery, or any other corrupt or criminal act in connection with any federal housing program [24 CFR (c)(iv)]. Any of the following will be considered evidence of family program abuse: Payment to the owner in excess of amounts authorized by the HABC for rent, security deposit, and additional services Offering bribes or illegal gratuities to the HABC Board of Commissioners, employees, contractors, or other HABC representatives Offering payments or other incentives to the owner or a third party as an inducement for the third party to make false or misleading statements to the HABC on the family s behalf Use of a false name or the use of falsified, forged, or altered documents Intentional misreporting of family information or circumstances (e.g. income, family composition) Omitted facts that were obviously known by a family member (e.g., not reporting employment income) Admission of program abuse by an adult family member The HABC may determine other actions to be program abuse based upon a preponderance of the evidence, as defined earlier in this chapter. Penalties for Program Abuse In the case of program abuse caused by a family the HABC may, at its discretion, impose any of the following remedies. The HABC may require the family to repay excess subsidy amounts paid by the HABC, as described earlier in this section. The HABC may require, as a condition of receiving or continuing assistance, that a culpable family member not reside in the unit. See policies in Chapter 3 (for applicants) and Chapter 12 (for participants). The HABC may deny or terminate the family s assistance following the policies set forth in Chapter 3 and Chapter 12 respectively. The HABC may refer the family for state or federal criminal prosecution as described in section 14-II.E. Page 14-7

8 14-II.C. OWNER-CAUSED ERROR OR PROGRAM ABUSE Owner requirements that are part of the regular process of offering, leasing, and maintaining a unit (e.g., HQS compliance, fair housing) are addressed in the appropriate chapters of this plan. This section focuses on errors and program abuse by owners. An incorrect subsidy determination caused by an owner generally would be the result of an incorrect owner statement about the characteristics of the assisted unit (e.g., the number of bedrooms, which utilities are paid by the family). It also includes accepting duplicate housing assistance payments for the same unit in the same month, or after a family no longer resides in the unit. Owner Reimbursement to the HABC In all cases of overpayment of subsidy caused by the owner, the owner must repay to the HABC any excess subsidy received. The HABC may recover overpaid amounts by withholding housing assistance payments due for subsequent months, or if the debt is large, the HABC may allow the owner to pay in installments over a period of time [HCV GB p ]. In cases where the owner has received excess subsidy, the HABC will require the owner to repay the amount owed in accordance with the policies in Section 16-IV.B. Prohibited Owner Actions An owner participating in the HCV program must not: Make any false statement to the HABC [Title 18 U.S.C. Section 1001]. Commit fraud, bribery, or any other corrupt or criminal act in connection with any federal housing program [24 CFR (a)(3)] including: Any of the following will be considered evidence of owner program abuse: Charging the family rent above or below the amount specified by the HABC Charging a security deposit other than that specified in the family s lease Charging the family for services that are provided to unassisted tenants at no extra charge Knowingly accepting housing assistance payments for any month(s) after the family has vacated the unit Knowingly accepting incorrect or excess housing assistance payments Offering bribes or illegal gratuities to the HABC Board of Commissioners, employees, contractors, or other HABC representatives Offering payments or other incentives to an HCV family as an inducement for the family to make false or misleading statements to the HABC Residing in the unit with an assisted family Page 14-8

9 Remedies and Penalties When the HABC determines that the owner has committed program abuse, the HABC may take any of the following actions: Require the owner to repay excess housing assistance payments, as discussed earlier in this section and in accordance with the policies in Chapter 16. Terminate the HAP contract (See Chapter 13). Bar the owner from future participation in any HABC programs. Refer the case to state or federal officials for criminal prosecution as described in section 14-II.E. 14-II.D. HABC-CAUSED ERRORS OR PROGRAM ABUSE The responsibilities and expectations of HABC staff with respect to normal program administration are discussed throughout this plan. This section specifically addresses actions of a HABC staff member that are considered errors or program abuse related to the HCV program. Additional standards of conduct may be provided in the HABC personnel policy. HABC-caused incorrect subsidy determinations include (1) failing to correctly apply HCV rules regarding family composition, income, assets, and expenses, (2) assigning the incorrect voucher size to a family, and (3) errors in calculation. Repayment to the HABC Neither a family nor an owner is required to repay an overpayment of subsidy if the error or program abuse is caused by HABC staff [HCV GB ]. HABC Reimbursement to Family or Owner The HABC must reimburse a family for any underpayment of subsidy, regardless of whether the underpayment was the result of staff-caused error or staff or owner program abuse. Funds for this reimbursement must come from the HABC s administrative fee reserves [HCV GB p ]. Prohibited Activities Any of the following will be considered evidence of program abuse by HABC staff: Failing to comply with any HCV program requirements for personal gain Failing to comply with any HCV program requirements as a result of a conflict of interest relationship with any applicant, participant, or owner Seeking or accepting anything of material value from applicants, participating families, vendors, owners, contractors, or other persons who provide services or materials to the HABC Disclosing confidential or proprietary information to outside parties Gaining profit as a result of insider knowledge of HABC activities, policies, or practices Page 14-9

10 Misappropriating or misusing HCV funds Destroying, concealing, removing, or inappropriately using any records related to the HCV program Committing any other corrupt or criminal act in connection with any federal housing program 14-II.E. CRIMINAL PROSECUTION When the HABC determines that program abuse by an owner, family, or HABC staff member has occurred and the amount of overpaid subsidy meets or exceeds the threshold for prosecution under local or state law, the HABC will refer the matter to the appropriate entity for prosecution. When the amount of overpaid assistance meets or exceeds the federal threshold, the case will also be referred to the HUD Office of Inspector General (OIG). Other criminal violations related to the HCV program will be referred to the appropriate local, state, or federal entity. 14-II.F. FRAUD AND PROGRAM ABUSE RECOVERIES The HABC may retain a portion of program fraud losses that the HABC recovers from a family or owner through litigation, court order, or a repayment agreement [24 CFR ]. The HABC must be the principal party initiating or sustaining the action to recover amounts due from tenants that are due as a result of fraud and abuse. 24 CFR permits the HABC to retain the greater of: 50 percent of the amount it actually collects from a judgment, litigation (including settlement of a lawsuit) or an administrative repayment agreement, or Reasonable and necessary costs that the HABC incurs related to the collection including costs of investigation, legal fees, and agency collection fees. The family must be afforded the opportunity for an informal hearing in accordance with requirements in 24 CFR If HUD incurs costs on behalf of the HABC related to the collection, these costs must be deducted from the amount retained by the HABC. Page 14-10